Where Are You Going Wrong With Your Money? (and what to do about it)

I identify so much with this post. For years, my favourite phrase was “I don’t know where my money goes”. It honestly felt like someone was either stealing my money, or I was losing it somewhere. I couldn’t possibly be the one spending it all! Maybe you feel the same?

Then one day I’d had enough! I sat down and started a spending diary. I had a plain notebook and a page for every day and I recorded what I spent my money on. Incidentally, it was a technique my mum taught me many years before, but I’d always dismissed it as unnecessary.

How wrong I was!!

I worked out how much money I had for spending (after paying my bills), and I took the money out of my account on payday. I put it into envelopes that were labelled with things like “food shopping”, “play money” and “petrol”. This was my monthly budget, and I HAD to use cash.

It was eye-opening! The amount of coffees I was purchasing, food at work, itty-bitty things from supermarkets for dinner rather than one bigger, planned shop etc. It was all mounting up, and using cash made me HIGHLY aware of this. There is something about spending actual money that sends different signals to your brain that changes how you feel about a transaction. It suddenly became much harder to part with it.

After 6 months, I had really trained myself to spend less. I used the free tea and coffee at work, or brought in my own. I brought in lunches from home. My food shopping was planned before I went, and I used the freezer more.

Don’t get me wrong, I still have to check myself. I can very easily slip into bad habits, but I set up the foundation, and the habit is harder for me to break. I want the same for you too.

Show me the Money

Picture the scenario: you got paid last week, it was a pretty nice pay packet, you believe your finances are in good health, you go to withdraw money, or pay off some debt and you see your account, and it is much, much less than you thought.

So how does this happen? You believe you have done quite well this past week, and the initial reaction is often ‘I’ve been robbed’, but this is (very, very rarely) the case. Instead, it is usually due to frivolous spending on haphazard purchases, along with fundamental carelessness towards your accounts.

“If you had a friend that you treated like your money, would they stick around?” – The Female Money Doctor

Everyone wants to be better with money, and there is a difference between being frugal, and being cheap. You still need to spend money, but you also need to ensure you are spending, saving, and paying off your debt in the right way, at the same time.

So where might your money be going?

Luxuries

Luxury spending is not just buying designer shoes and handbags. It is also when you buy brand name items that don’t do all that much different from generic brands. This isn’t true of everything, of course, but when walking around the supermarket, it can be easy to grab the thing you recognise as opposed to the dull package of the home-brand product, even though they aren’t all that different from one another. Supermarkets are sneaky – they put everything more expensive at eye-level where you’re more likely to see it, and cheaper items closer to the floor, so watch out!

Furthermore, eating out, treating yourself to things you don’t need, and spending for the sake of spending are all ways in which you can hurt your financial health and leave you wondering where all that money went. Try to cut down on eating out. Maybe set up a monthly “date night” with your other half or your friends. You could take it in turns to cook for each other the rest of the time. Unfortunately, if you want to free up more money to save or invest, then this is something that just has to be done.

“You can afford anything, but not everything” – Paula Pant

Debt

We get into debt; it seems that it is an inevitable part of life that is unavoidable. I can tell you now that its not. There are people out there who have NO debt and have saved enough money to buy their university courses, phones, cars etc OUTRIGHT because they took time to SAVE and/or their parents had enough foresight to save for their child early on.

This is of course not the norm, and most people do end up in debt over something, even if it is just their mortgage.

What is avoidable, though, is letting this debt pile up so far that it starts to become an overwhelming problem. Being in debt will not just hurt your financial prospects but also your mental and social health, so it is best to pay-off your debt as soon as you can.

Being burdened with debt can also hurt your credit score, which leads some people to seek out credit repair companies to help in fixing the damage of your spending. You don’t need to spend money to do this though. Tracking your credit score monthly with companies like noddle who do it for free, paying bills on time, not defaulting on payments, not over borrowing, and being on the electoral register are all things you can do to improve the health of your credit score.

Having a decent credit score is essential should you ever need to take out a loan to buy a house, or even a phone plan. Avoiding this issue early on, and getting into good repayment habits will help make your life more comfortable.

Lack of Planning

This is one of the leading causes of financial problems. Failing to plan for anything at all can result in money being wasted on a whole host of amenities. Issues with health, home and career can strike at any time, and being unprepared for these problems can quickly lead to falling into a hole that is difficult to get out of.

While everyone always talks about savings, there are few who actively pursue it. One solution is to look at budgeting apps and platforms that help you track where the money goes. Some will even give you advice on how to alter your lifestyle for better savings and more efficient planning.

You probably already know where you are going wrong with a lot of your spending. But it is hard to motivate yourself to actually do it. The bottom line is – just “frigging” do it!! No excuses.

Your future-self will thank you.

Love it! I hope you enjoyed it too. Come and tell me what you’re going to do to turn around your finances over in my PRIVATE Facebook group!

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I'm Dr Nikki Ramskill - The Female Money Doctor. I'm based in the UK and want to talk about all things money with you! Become a "Money-Medic" and I'll send you a weekly money-prescription of more tips and advice....

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I'm Dr Nikki Ramskill - The Female Money Doctor. I'm based in the UK and want to talk about all things money with you! Become a "Money-Medic" and I'll send you a weekly money-prescription of more tips and advice....

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